Following a comprehensive audit, Derrimon Trading Company Limited (DTL) has rectified the Enterprise Resource Planning (ERP) system issue that disrupted reported margins within its retail division. The Company is now able to report accurately on its financial growth, and the turnaround is already visible in its Q1 2026 financial results.

“The steps we’ve taken over the past year, including a full platform reconfiguration and a complete inventory revaluation, give us confidence in the integrity of our numbers going forward,” said Ian Kelly, DTL’s Chief Executive Officer. “Our focus now is on translating this stronger foundation into consistent operating performance, while we work closely with all our financial partners to align our capital structure with the business as it stands today.” 

How the Issue Originated

In 2018, the Company recognised that to support the scale and complexity of its growing retail and distribution operations, it required a more robust accounting and technology platform than the existing systems could provide. Following an extensive due diligence process, which included industry research and site visits to review the selected ERP platform operating in live retail environments, the Company selected an implementation partner and began the scope of work for the ERP system. Implementation was delayed by the COVID-19 pandemic and ultimately began in 2021.

The system’s initial go-live took place at the Company’s May Pen Select Grocers location in late 2022, and was intended as a pilot store ahead of a phased rollout to the remainder of the Company’s stores. This pilot rollout encountered several configuration issues. In August 2023, a cybersecurity incident compromised the legacy systems, and external consultants recommended accelerated migration away from the vulnerable legacy systems and onto the ERP platform. The Company acted on this guidance and engaged a new implementation partner in September 2023 to address the outstanding issues. Then, in January 2024, DTL rolled out the platform across all the locations, but configuration and data-related issues began to surface more broadly.

Rebuilding the system with the desired controls and visibility took time, and limited insight into unit of measure, unit costs and margins persisted through 2024 and into 2025. The underlying configuration gaps from the original implementation remained undetected until a full inventory revaluation exercise brought them to light in December 2025. That reconfiguration took approximately 10 months and required the Company to recalculate transactions from the beginning of the affected period and to revise its inventory costing methodology from average cost to First In, First Out (FIFO).

The Financial Impact 

The financial statements for the year ended 31 December 2025 reported a net loss for the Group amounting to $2.58 billion due mainly to the stock write-off during the year. This is due to significant variances between the physical quantity and the perpetual inventory system. The financial statements were restated to account for the prior year discrepancies, which took place over the period from 2023 to 2025. The total amount written off amounted to $3.77 billion. 

The effect of the restatement affected the cost of sales, gross profit and retained earnings for the Company across the reporting periods 31 December 2023 to 31 December 2025, with cost of sales for the financial year 2025 revised to $10.48 billion and gross profit margin for the year adjusted downwards to 3.24%. 

“The impact of this on our business, our shareholders and our team has not been lost on us, and we are disappointed that it happened,” said Kelly. “Once we understood the materiality of what had occurred, we undertook a deliberate and thorough response. That meant identifying the root cause, undertaking independent audits to validate internal findings, restating our results to present an accurate financial position, and reinforcing the systems and governance required to restore full confidence in our reporting and ERP outputs.”

Strengthened Governance and Oversight

With the major issues corrected, the Group’s Q1 2026 unaudited results already reflect the turnaround, with consolidated gross profit climbing 120.93% year over year from $427.38 million to $944.20 million and net loss narrowing to $169.26 million, down from $628.09 million in the same period last year.

Alongside the technical remediation, the Company has strengthened leadership and oversight across several key areas. Three divisional leads have been appointed to head the wholesale, supermarket and distribution segments, and the finance department is being restructured with the support of the Audit Committee. 

“Our shareholders and stakeholders deserve a complete and transparent account of what took place, and that is what we have set out to provide,” said Derrick Cotterell, Chairman of DTL. “The Board is confident that the corrective measures now in place strengthen the Company’s foundation for the years ahead, and we are committed to keeping our stakeholders fully informed on our progress.”